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Canadian business owners unprepared for exiting businesses,
says RBC
Planning is key to successful transition
TORONTO, October 21, 2008 — According to a
recent RBC study on business succession, one in four owners
is considering exiting their business within the next five
years. With 62 per cent of business owners surveyed over the
age of 50 - many may not have made plans for the next phase
in the life of their business. In fact, only 23 per cent of
the business owners surveyed who are considering exiting within
five years have a succession plan in place.
"Even if retiring is the furthest thing from their mind,
all business owners need to plan for their future," says
Nadia Ceciliot, national manager, Commercial Financial Services,
RBC Royal Bank. "We know that they are very busy and
focused on the daily demands of running their business. But
no matter what stage they are in, having a succession plan
in place will help ensure a smooth transition in the future
-- not only for the business, but also for the business owner
and his or her family."
There may be a number of reasons why business owners do not
focus on succession planning. Some feel they just do not have
the time; others may find it difficult to consider a time
when they're not in charge while some may not know how to
get started. But the reality is that one of the keys to a
successful future, for both the business and the owner, is
a well formulated, thought-out succession plan.
Building a succession plan takes time and requires professional
advice. The execution of a plan can take anywhere from three
to five years to complete. The benefits of proper planning
include maximizing the value of a business and maintaining
control over what happens in the long term.
Tips to successful planning:
- Get started. Evaluate your personal and business
situation as it stands now; then think about what you want
to do in the future and how that works with your business
goals and needs.
- What exit option is right for you? Do you want
to keep the business in the family, sell to a partner or
group of employees, or sell to a third-party buyer?
- Assemble your advisory team. Having the right
advisors at the table will enable you to gain objective
advice and develop a sound plan.
- What's the current value of your business? Knowing
what your business is worth is a key and may also provide
the opportunity to enhance value for when you're ready to
transition.
- Plan your most effective tax strategy. Allows
you to enhance your wealth strategy through an effective
tax strategy.
- Create a personal retirement plan. Mapping out
your personal plans will help you transition and achieve
your retirement goals.
- Communicate, Communicate, Communicate. Before,
during and after.
"It's important to note that the creation of a plan
is a multidisciplinary process - the key to which is getting
the right help. No one should do it on their own," adds
Ceciliot. "When owners start or grow a business, they
rely on advice from their peers, family, employees, accountants,
lawyers and financial institutions. It is no different when
creating a succession plan."
Throughout October and November, in cities across Canada,
RBC will host "Find Success in Succession" events
across Canada to help business owners start their succession
planning. The events will be facilitated by Peter Legge, founder,
Chairman and CEO of Canada Wide Media Limited, who will share
his recent succession experience and then be joined by a panel
of advisors. Participants will also receive a copy of RBC's
Guidebook, How to Succeed with Business Succession Planning,
which provides practical steps and considerations in developing
a successful succession plan.
RBC provides specialized financial advice to business and
business owners, including, business transition financing
advice, wealth management, personal retirement and estate
planning. For more information on succession planning, call
1-800-769-2511 or visit www.rbcroyalbank.com/succession.
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Media Contact:
Jackie Braden, Media Relations, (416) 974-2124, jackie.braden@rbc.com
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